I think we're talking about 2 different things.  You're talking about attach rates and the fact that the XBOX brand has a 'core niche market'.  And while that's completely true, I'm talking about how, no matter how core and attached the XBOX market is in Japan, its still microscopic compared to any other market, such as DS, PSP, Wii and PS3.  And a few 360 games a year that interests a select group isn't going to grow that market any wider, as the rest of the market (roughly 55 million installed userbase) aren't interested in the 360.

I don't think "software shortage" is the issue though. The issue is, the 360 doesn't have enough exclusive big name Japanese IPs to compete. That's why they are losing. Software shortage is not the issue because mainstream gamers in Japan don't buy a whole lot of new games in stores anyway. The tie ratios are atrocious. They just want Final Fantasy 567 and Dynasty Warriors 741 (much like how westerners want Guitar Hero 948). That's what moves the consoles. The new IPs don't move consoles unless you hit the jackpot and have a killer marketing campaign (something that M$ is lacking in Japan). Software shortage is more of an issue with the hardcore gaming geeks. And that is the one demographic that the Xbox 360 doesn't have trouble selling to. Most likely because the average 360 owner in Japan is likely to own multiple systems anyway (for evidence of this, look at the Tekken 6 gap and then look at the Bayonetta gap.)

It´s easy.
Japan has two great national consoles, so, why would they want a Western one?
Besides, when it comes to gaming, the Japanese are an elitist bunch, they simply don´t like western games, they look at it as second rating games, labeling it "youge" which has a terribly discriminatory meaning (Square-Enix´s president said it, not me).
It´s stupid, but it´s true.
I have nothing against the Japaneses people, none whatsoever, but when it comes to games, they are unable to see quality outside they own country, unable to see that quality doesn´t depend on the world side it is made on (east - west).

Of course, not every Japanese person think like that.

@loves2sploose do you wanna start a list war? 1.Valkyria Chronicles(220k) 2.White Knight Chronicles (370k) 3.Tales of Vesperia(340k)upgraded these appeal to casual jrpg gamers but for the hardcore 4. Demon 's Soul 5.Disgaea 3 6.Eternal Sonata (upgraded edition) 7.Trinity Universe 8. Atelier Rorona 9. Agarest Senki Zero 10.Tears to Tiara 11. Tears to Tiara Gaiden 12.Dikai Jidai Online Cruse del 'sur 13. Dikai Jidai online El Oriente 14. Folksoul 15. 3D dot games heroes 16. Wizardy(PSN) these are the realesed ones well whatever you since PS3 has FFXIII and a ton of jrpgs coming in first Quarter 2010 it is both otaku 's and casual jrpg gamefs console of choice

I don't think you quite understand what makes a console hardcore. The SMS had less niche games than the NES. Is that not a hardcore console? The TG-16/TG-CD had less niche games than the SNES. Is that not a hardcore console? The Saturn had less niche games than the Playstation. Is that not a hardcore console? The Dreamcast had less niche games than the Playstation 2. Is that not a hardcore console?

ps3 has games that are for casual jrpg and some that are for specific gamers(hardcore) that fact that 360 has least userbase this gen in japan  DOESN 'T MAKE IT HARDCORE

So the 360 being less popular in Japan makes it not hardcore? Do you know what hardcore and niche mean?

The 360 install base, while tight knit at 1.2 million, has the highest software to hardware tie ratio in Japan. That means they buy more new games from stores on average than any other owner. That qualifies the 360 following in Japan as hardcore.

not only japanese but most asian countries support the brand power of Sony products maybe even the whole world view sony as the most recognized brand that produces the best quality for technologies. And consider the other people who ignorant to try out other brands or doesnt like change at all.

sorry but almost always 3rd place console has the best software ratio if you don 't know it and ps3 is somewhere between Wii  and 360

False. There is no proof that this is a trend. 360 is 3rd in Europe/Others (if not, it will be) and it has a lower tie ratio than PS3 in Europe/Others (except in UK, yes I'd say that the 360 doesnt have a hardcore following in Europe. Whether it's due to piracy or not, doesn't matter. They aren't buying the games). PS3 is 3rd in NA and it has a lower tie ratio than 360. Japan is the only region where the bronze medalist has the highest tie ratio.